Internship Legalities

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The Law

Ensuring your internship is lawfully compliant is essential. One of the most common
mistakes businesses make is offering an unpaid internship. The Department of Labor
(DOL) has established federal guidelines under the Fair Labor Standards Act (FLSA)
that define an unpaid internship.

If your company is for-profit and your internship program does not meet all six federal
guidelines, then the intern may be considered an employee rather than a trainee and
typically must be paid at least minimum wage. The federal guidelines are commonly
referred to as the “Six Prong Test” and can be found at the Department of Labor website. Please check the Department of Labor website regularly for updates.

From the Department of Labor website

The Test For Unpaid Interns

There are some circumstances under which individuals who participate in “for-profit”
private sector internships or training programs may do so without compensation. The
Supreme Court has held that the term "suffer or permit to work" cannot be interpreted
so as to make a person whose work serves only his or her own interest an employee
of another who provides aid or instruction. This may apply to interns who receive
training for their own educational benefit if the training meets certain criteria.
The determination of whether an internship or training program meets this exclusion
depends upon all of the facts and circumstances of each such program.

The following six criteria must be applied when making this determination:

The internship, even though it includes actual operation of the facilities of the
employer, is similar to training which would be given in an educational environment.

The internship experience is for the benefit of the intern.

The intern does not displace regular employees, but works under close supervision
of existing staff.

The employer that provides the training derives no immediate advantage from the activities
of the intern; and on occasion its operations may actually be impeded.

The intern is not necessarily entitled to a job at the conclusion of the internship.

The employer and the intern understand that the intern is not entitled to wages for
the time spent in the internship.

If all of the factors listed above are met, an employment relationship does not exist
under the FLSA, and the Act’s minimum wage and overtime provisions do not apply to
the intern. This exclusion from the definition of employment is necessarily quite
narrow because the FLSA’s definition of “employ” is very broad. Some of the most commonly
discussed factors for “for-profit” private sector internship programs are considered
below. See the Department of Labor website , Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act, for complete
information.